Oil futures fall back as supplies increase

The average price for
gasoline nationally rises
to $3.05 a gallon.

NEW YORK (AP) — Oil futures retreated from a new record above $100 a barrel set Thursday after the government reported a larger-than-expected decline in crude oil inventories and an unexpected increase in heating oil supplies.

One day after oil prices briefly touched $100 for the first time, the Energy Department’s Energy Information Administration said crude inventories fell by 4 million barrels last week, much more than the 1.7 million barrel decline analysts surveyed by Dow Jones Newswires, on average, had expected.

On the other hand, inventories of distillates, which include heating oil and diesel fuel, rose by 600,000 barrels, countering analyst expectations that distillate supplies would fall by 600,000 barrels. And supplies of gasoline rose by 1.9 million barrels, more than the 1.3 million-barrel increase analysts had expected.

The report ultimately pulled prices lower by showing that critical heating oil supplies and refinery capacity are growing more than expected.

Light, sweet crude for February delivery fell 44 cents to settle at $99.18 a barrel on the New York Mercantile Exchange after earlier rising to $100.09, a trading record.

“Any surprises [in the report] are more the result of false expectations as opposed to anything truly remarkable in the data,” said Tim Evans, an analyst at Citigroup Inc. in New York, who added that crude inventories often fall this time of year, while distillate and gasoline supplies typically increase.

February gasoline fell 2.75 cents to settle at $2.5414 a gallon on the Nymex, and February heating oil fell 2.13 cents to settle at $2.7191 a gallon. Both contracts set new trading records Thursday.

February natural gas fell 17.6 cents to settle at $7.674 per 1,000 cubic feet.

At the pump, meanwhile, gas prices rose 0.3 cent overnight to a national average of $3.052 a gallon, according to AAA and the Oil Price Information Service. Retail gas prices have rebounded in recent weeks, following oil’s lead.

Crude’s move to $100 a barrel prompted Indonesian officials to announce plans to ask OPEC to boost output to bring down oil prices, Dow Jones reported. While that may be tempting to some Organization of Petroleum Exporting Countries members, many analysts think high prices will themselves do the trick by cutting demand.

“It is unlikely the cartel will decide to increase output quotas ahead of the normally low-demand second quarter,” said Addison Armstrong, director of exchange traded markets at TFS Energy Futures LLC in Stamford, Conn., in a research note.